Optimism Returns

Yesterday I was on a panel speaking about the impact of the Shell cracker project on the regional construction industry at the Northeast Petrochem Conference in Pittsburgh. It was very interesting to see how another industry is reacting to the project. Construction and real estate players have been awaiting the final investment decision for at least a year but it turns out so have all the players in the petrochem industry. Shell Chemical’s exec in charge of the Appalchian region, Ate Visser, spoke about an hour before our panel. Let’s just say the room cleared out quite a bit after he finished.

What we learned from Visser was actually nothing really new. He mainly used the time to speak about the lag between the FID three weeks ago and the start of construction. From what I could tell, the delay won’t actually stop construction at the site but will slow down the execution of contracts already in place and extend the preliminary work being done.

The most interesting presentation was from a process engineer who explained a lot of chemical details about the cracker to a glazed-over crowd. The upshot was that he predicts there will be another intermediate chemical processing plant or two built in the region, the kind that takes the byproduct chemicals that aren’t converted to polyethylene or other plastics. His estimate of these kinds of plants was in the $4-5 billion range.

Even without factoring in another petrochemical plant, here’s how the Shell project is showing up in my intermediate forecast:

nonres forecast chart

All of the talk of the petrochem opportunities left the attendees in a real upbeat mood. They aren’t the only ones apparently. The MBA pre-released its Commercial Contractors Condition Index for the second quarter, which was above 2.5 (out of 4) for the first time in its four-year history. The big driver was a huge jump in optimism about business projections for the coming year. Don’t think that is a coincidence, following just a week or two after Shell’s announcement. The better news out of the C3 Index was that the backlog reading was up significantly too.

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One response to “Optimism Returns

  1. Thank You Shell
    Beaver County is ready to Grow
    Looking forward to a long and prosperous relationship
    Lets hope this growth expands to non-stop traffic at the airport

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